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Allowance for loan losses | 12 Months Ended
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Dec. 31, 2018
Receivables |
Allowance for loan losses | Note 9 – Allowance for loan losses The Corporation follows a systematic methodology to establish and evaluate the adequacy of the allowance for loan losses (“ALLL”) to provide for inherent losses in the loan portfolio. This methodology includes the consideration of factors such as current economic conditions, portfolio risk characteristics, prior loss experience and results of periodic credit reviews of individual lo ans. The provision for loan losses charged to current operations is based on this methodology. Loan losses are charged and recoveries are credited to the ALLL. The Corporation’s assessment of the ALLL is determined in accordance with the guidance of loss c ontingencies in ASC Subtopic 450-20 and loan impairment guidance in ASC Section 310-10-35. Also, the Corporation determines the ALLL on purchased impaired loans and purchased loans accounted for under ASC Subtopic 310-30, by evaluating decreases in expecte d cash flows after the acquisition date. The accounting guidance provides for the recognition of a loss allowance for groups of homogeneous loans. The determination of the general ALLL includes the following principal factors: Base net loss rates, which are based on the moving average of annualized net loss rates computed over a 5-year historical loss period for the commercial and construction loan portfolios, and an 18-month period for the consumer and mortgage loan portfolios. The base net loss rates a re applied by loan type and by legal entity. Recent loss trend adjustment, which replaces the base loss rate with a 12-month average loss rate, when these trends are higher than the respective base loss rates. The objective of this adjustment is to allow f or a more recent loss trend to be captured and reflected in the ALLL estimation process. For the period ended December 31, 2018, 26% (December 31, 2017 - 69%) of the ALLL for the BPPR segment loan portfolios utilized the recent lo ss trend adjustment instead of the base loss. The recent loss trends were impacted by charge-off activity related to the impact of Hurricanes Irma and Maria. T he effect of replacing the base loss with the recent loss trend adjustment was mainly concentrate d in the commercial, mortgage and overall consumer portfolios for 2018 and in the leasing, credit cards, personal, auto and mortgage loan portfolios for 2017. For the period ended December 31, 2018, 28% (December 31, 2017 - 3 %) of t he Popular U.S. segment loan portfolios utilized the recent loss trend adjustment instead of the base loss. The effect of replacing the base loss with the recent loss trend adjustment was concentrated in the consumer portfolio for 2018 and 2017. Environmen tal factors, which include credit and macroeconomic indicators such as unemployment rate, economic activity index and delinquency rates, adopted to account for current market conditions that are likely to cause estimated credit losses to differ from histor ical losses. The Corporation reflects the effect of these environmental factors on each loan group as an adjustment that, as appropriate, increases the historical loss rate applied to each group. Environmental factors provide updated perspective on credit and economic conditions. Regression analysis is used to select these indicators and quantify the effect on the general ALLL. The Corporation’s methodology also includes qualitative judgmental reserves based on stressed credit quality assumptions to provide for p robable losses in the loan portfolios not embedded in the historical loss rates. During the third quarter of 2018, management completed the annual review of the components of the ALLL models. As part of this review, management updated core metrics r elated to the estimation process for evaluating the adequacy of the general ALLL. These updates to the ALLL models, which are described in the paragraph below, were implemented as of September 30, 2018 and resulted in a net decrease to the ALLL of $6.1 million. Management made the following revisions to the ALLL models during the third quarter of 2018: Annual review and recalibration of the environmental factors adjustment s. The environmental factor s adjustments are developed by performing regre ssion analyses on selected credit and economic indicators for each applicable loan segment. During the third quarter of 2018, the environmental factor models used to account for changes in current credit and macroeconomic conditions were reviewed and recal ibrated based on the latest applicable trends. The effect of the recalibration to the environmental factors adjustments resulted in a decrease to the ALLL of $5.9 million and $0.2 million at the BPPR and Popular U.S. segment s, respectively. The following tables present the changes in the allowance for loan losses, loan ending balances and whether such loans and the allowance pertain to loans individually or collectively evaluated for impairment for the years ended December 31, 2018 and 2017.
For the year ended December 31, 2018
Puerto Rico - Non-covered loans
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Leasing |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 171,531 |  | $ | 1,286 |  | $ | 159,081 |  | $ | 11,991 |  | $ | 174,215 |  | $ | 518,104
| Provision (reversal of provision) |  | 101,614 |  |  | (1,754) |  |  | 15,297 |  |  | 5,525 |  |  | 75,779 |  |  | 196,461
| Charge-offs |  | (82,352) |  |  | (9) |  |  | (69,393) |  |  | (8,297) |  |  | (138,161) |  |  | (298,212)
| Recoveries |  | 16,421 |  |  | 1,363 |  |  | 4,571 |  |  | 2,267 |  |  | 32,573 |  |  | 57,195
| Allowance transferred from covered loans [1] |  | - |  |  | - |  |  | 33,422 |  |  | - |  |  | 188 |  |  | 33,610
Ending balance | $ | 207,214 |  | $ | 886 |  | $ | 142,978 |  | $ | 11,486 |  | $ | 144,594 |  | $ | 507,158
Specific ALLL | $ | 52,190 |  | $ | 56 |  | $ | 38,760 |  | $ | 320 |  | $ | 24,083 |  | $ | 115,409
General ALLL | $ | 155,024 |  | $ | 830 |  | $ | 104,218 |  | $ | 11,166 |  | $ | 120,511 |  | $ | 391,749
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired non-covered loans | $ | 398,518 |  | $ | 1,788 |  | $ | 509,468 |  | $ | 1,099 |  | $ | 104,235 |  | $ | 1,015,108
Non-covered loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 6,974,125 |  |  | 84,167 |  |  | 5,923,855 |  |  | 933,674 |  |  | 4,952,543 |  |  | 18,868,364
Total non-covered loans held-in-portfolio | $ | 7,372,643 |  | $ | 85,955 |  | $ | 6,433,323 |  | $ | 934,773 |  | $ | 5,056,778 |  | $ | 19,883,472
[1] Represents the allowance transferred from covered to non-covered loans at June 30, 2018, due to the Termination Agreement with the FDIC.
For the year ended December 31, 2018
Puerto Rico - Covered loans
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Leasing |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | - |  | $ | - |  | $ | 32,521 |  | $ | - |  | $ | 723 |  | $ | 33,244
| Provision (reversal of provision) |  | - |  |  | - |  |  | 2,265 |  |  | - |  |  | (535) |  |  | 1,730
| Charge-offs |  | - |  |  | - |  |  | (1,446) |  |  | - |  |  | (2) |  |  | (1,448)
| Recoveries |  | - |  |  | - |  |  | 82 |  |  | - |  |  | 2 |  |  | 84
| Allowance transferred to non-covered loans |  | - |  |  | - |  |  | (33,422) |  |  | - |  |  | (188) |  |  | (33,610)
Ending balance | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Specific ALLL | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
General ALLL | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired covered loans | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Covered loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Total covered loans held-in-portfolio | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
For the year ended December 31, 2018
Popular U.S.
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Legacy |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 44,134 |  | $ | 7,076 |  | $ | 4,541 |  | $ | 798 |  | $ | 15,529 |  | $ | 72,078
| Provision (reversal of provision) |  | 7,551 |  |  | 5,268 |  |  | (478) |  |  | (1,861) |  |  | 19,401 |  |  | 29,881
| Charge-offs |  | (24,920) |  |  | (5,806) |  |  | (232) |  |  | 114 |  |  | (22,118) |  |  | (52,962)
| Recoveries |  | 5,136 |  |  | - |  |  | 603 |  |  | 1,918 |  |  | 5,536 |  |  | 13,193
Ending balance | $ | 31,901 |  | $ | 6,538 |  | $ | 4,434 |  | $ | 969 |  | $ | 18,348 |  | $ | 62,190
Specific ALLL | $ | - |  | $ | - |  | $ | 2,451 |  | $ | - |  | $ | 1,810 |  | $ | 4,261
General ALLL | $ | 31,901 |  | $ | 6,538 |  | $ | 1,983 |  | $ | 969 |  | $ | 16,538 |  | $ | 57,929
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | - |  | $ | 12,060 |  | $ | 9,420 |  | $ | - |  | $ | 8,507 |  | $ | 29,987
Loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 4,670,376 |  |  | 681,434 |  |  | 792,515 |  |  | 25,949 |  |  | 424,156 |  |  | 6,594,430
Total loans held-in-portfolio | $ | 4,670,376 |  | $ | 693,494 |  | $ | 801,935 |  | $ | 25,949 |  | $ | 432,663 |  | $ | 6,624,417
For the year ended December 31, 2018
Popular, Inc.
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Legacy | Leasing |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 215,665 |  | $ | 8,362 |  | $ | 196,143 |  | $ | 798 | $ | 11,991 |  | $ | 190,467 |  | $ | 623,426
| Provision (reversal of provision) |  | 109,165 |  |  | 3,514 |  |  | 17,084 |  |  | (1,861) |  | 5,525 |  |  | 94,645 |  |  | 228,072
| Charge-offs |  | (107,272) |  |  | (5,815) |  |  | (71,071) |  |  | 114 |  | (8,297) |  |  | (160,281) |  |  | (352,622)
| Recoveries |  | 21,557 |  |  | 1,363 |  |  | 5,256 |  |  | 1,918 |  | 2,267 |  |  | 38,111 |  |  | 70,472
Ending balance | $ | 239,115 |  | $ | 7,424 |  | $ | 147,412 |  | $ | 969 | $ | 11,486 |  | $ | 162,942 |  | $ | 569,348
Specific ALLL | $ | 52,190 |  | $ | 56 |  | $ | 41,211 |  | $ | - | $ | 320 |  | $ | 25,893 |  | $ | 119,670
General ALLL | $ | 186,925 |  | $ | 7,368 |  | $ | 106,201 |  | $ | 969 | $ | 11,166 |  | $ | 137,049 |  | $ | 449,678
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | 398,518 |  | $ | 13,848 |  | $ | 518,888 |  | $ | - | $ | 1,099 |  | $ | 112,742 |  | $ | 1,045,095
Loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 11,644,501 |  |  | 765,601 |  |  | 6,716,370 |  |  | 25,949 |  | 933,674 |  |  | 5,376,699 |  |  | 25,462,794
Total loans held-in-portfolio | $ | 12,043,019 |  | $ | 779,449 |  | $ | 7,235,258 |  | $ | 25,949 | $ | 934,773 |  | $ | 5,489,441 |  | $ | 26,507,889
For the year ended December 31, 2017
Puerto Rico - Non-covered loans
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Leasing |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 189,686 |  | $ | 1,353 |  | $ | 143,320 |  | $ | 7,662 |  | $ | 125,963 |  | $ | 467,984
| Provision (reversal of provision) |  | 4,240 |  |  | (2,690) |  |  | 90,705 |  |  | 11,099 |  |  | 138,385 |  |  | 241,739
| Charge-offs |  | (49,591) |  |  | (3,588) |  |  | (78,121) |  |  | (8,407) |  |  | (109,252) |  |  | (248,959)
| Recoveries |  | 27,196 |  |  | 6,211 |  |  | 3,177 |  |  | 1,637 |  |  | 19,119 |  |  | 57,340
Ending balance | $ | 171,531 |  | $ | 1,286 |  | $ | 159,081 |  | $ | 11,991 |  | $ | 174,215 |  | $ | 518,104
Specific ALLL | $ | 36,982 |  | $ | - |  | $ | 46,354 |  | $ | 475 |  | $ | 21,849 |  | $ | 105,660
General ALLL | $ | 134,549 |  | $ | 1,286 |  | $ | 112,727 |  | $ | 11,516 |  | $ | 152,366 |  | $ | 412,444
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired non-covered loans | $ | 323,455 |  | $ | - |  | $ | 509,033 |  | $ | 1,456 |  | $ | 99,180 |  | $ | 933,124
Non-covered loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 6,942,444 |  |  | 95,369 |  |  | 6,067,746 |  |  | 808,534 |  |  | 3,230,841 |  |  | 17,144,934
Total non-covered loans held-in-portfolio | $ | 7,265,899 |  | $ | 95,369 |  | $ | 6,576,779 |  | $ | 809,990 |  | $ | 3,330,021 |  | $ | 18,078,058
For the year ended December 31, 2017
Puerto Rico - Covered Loans
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Leasing |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | - |  | $ | - |  | $ | 30,159 |  | $ | - |  | $ | 191 |  | $ | 30,350
| Provision |  | - |  |  | - |  |  | 5,098 |  |  | - |  |  | 644 |  |  | 5,742
| Charge-offs |  | - |  |  | - |  |  | (4,049) |  |  | - |  |  | (122) |  |  | (4,171)
| Recoveries |  | - |  |  | - |  |  | 1,313 |  |  | - |  |  | 10 |  |  | 1,323
Ending balance | $ | - |  | $ | - |  | $ | 32,521 |  | $ | - |  | $ | 723 |  | $ | 33,244
Specific ALLL | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
General ALLL | $ | - |  | $ | - |  | $ | 32,521 |  | $ | - |  | $ | 723 |  | $ | 33,244
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired covered loans | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Covered loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | - |  |  | - |  |  | 502,929 |  |  | - |  |  | 14,345 |  |  | 517,274
Total covered loans held-in-portfolio | $ | - |  | $ | - |  | $ | 502,929 |  | $ | - |  | $ | 14,345 |  | $ | 517,274
For the year ended December 31, 2017
Popular U.S.
(In thousands) | Commercial |  | Construction |  | Mortgage |  | Legacy |  | Consumer |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 12,968 |  | $ | 8,172 |  | $ | 4,614 |  | $ | 1,343 |  | $ | 15,220 |  | $ | 42,317
| Provision (reversal of provision) |  | 65,323 |  |  | (1,103) |  |  | 167 |  |  | (2,275) |  |  | 15,831 |  |  | 77,943
| Charge-offs |  | (36,399) |  |  | - |  |  | (1,223) |  |  | (897) |  |  | (19,926) |  |  | (58,445)
| Recoveries |  | 2,242 |  |  | 7 |  |  | 983 |  |  | 2,627 |  |  | 4,404 |  |  | 10,263
Ending balance | $ | 44,134 |  | $ | 7,076 |  | $ | 4,541 |  | $ | 798 |  | $ | 15,529 |  | $ | 72,078
Specific ALLL | $ | - |  | $ | - |  | $ | 2,478 |  | $ | - |  | $ | 953 |  | $ | 3,431
General ALLL | $ | 44,134 |  | $ | 7,076 |  | $ | 2,063 |  | $ | 798 |  | $ | 14,576 |  | $ | 68,647
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | - |  | $ | - |  | $ | 9,242 |  | $ | - |  | $ | 5,057 |  | $ | 14,299
Loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 4,222,962 |  |  | 784,660 |  |  | 684,386 |  |  | 32,980 |  |  | 475,449 |  |  | 6,200,437
Total loans held-in-portfolio | $ | 4,222,962 |  | $ | 784,660 |  | $ | 693,628 |  | $ | 32,980 |  | $ | 480,506 |  | $ | 6,214,736
For the year ended December 31, 2017
Popular, Inc.
(In thousands) | Commercial | Construction | Mortgage | Legacy | Leasing | Consumer | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 202,654 | $ | 9,525 | $ | 178,093 | $ | 1,343 | $ | 7,662 | $ | 141,374 | $ | 540,651
| Provision (reversal of provision) |  | 69,563 |  | (3,793) |  | 95,970 |  | (2,275) |  | 11,099 |  | 154,860 |  | 325,424
| Charge-offs |  | (85,990) |  | (3,588) |  | (83,393) |  | (897) |  | (8,407) |  | (129,300) |  | (311,575)
| Recoveries |  | 29,438 |  | 6,218 |  | 5,473 |  | 2,627 |  | 1,637 |  | 23,533 |  | 68,926
Ending balance | $ | 215,665 | $ | 8,362 | $ | 196,143 | $ | 798 | $ | 11,991 | $ | 190,467 | $ | 623,426
Specific ALLL | $ | 36,982 | $ | - | $ | 48,832 | $ | - | $ | 475 | $ | 22,802 | $ | 109,091
General ALLL | $ | 178,683 | $ | 8,362 | $ | 147,311 | $ | 798 | $ | 11,516 | $ | 167,665 | $ | 514,335
Loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | 323,455 | $ | - | $ | 518,275 | $ | - | $ | 1,456 | $ | 104,237 | $ | 947,423
Loans held-in-portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |
| excluding impaired loans |  | 11,165,406 |  | 880,029 |  | 7,255,061 |  | 32,980 |  | 808,534 |  | 3,720,635 |  | 23,862,645
Total loans held-in-portfolio | $ | 11,488,861 | $ | 880,029 | $ | 7,773,336 | $ | 32,980 | $ | 809,990 | $ | 3,824,872 | $ | 24,810,068
The following table provides the activity in the allowance for loan losses related to loans accounted for pursuant to ASC Subtopic 310-30.
| ASC 310-30
| For the years ended
(In thousands) | December 31, 2018 |  | December 31, 2017
Balance at beginning of period | $ | 119,505 |  | $ | 91,308
Provision |  | 61,270 |  |  | 81,877
Net charge-offs |  | (58,640) |  |  | (53,680)
Balance at end of period | $ | 122,135 |  | $ | 119,505
Impaired loans The following tables present loans individually evaluated for impairment at December 31, 2018 and 2017.
December 31, 2018
Puerto Rico
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal |  | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance |  | allowance
Commercial multi-family | $ | 932 | $ | 932 | $ | 4 | $ | - | $ | - | $ | 932 | $ | 932 | $ | 4
Commercial real estate non-owner occupied |  | 85,583 |  | 86,282 |  | 27,494 |  | 96,005 |  | 138,378 |  | 181,588 |  | 224,660 |  | 27,494
Commercial real estate owner occupied |  | 113,592 |  | 132,677 |  | 7,857 |  | 26,474 |  | 60,485 |  | 140,066 |  | 193,162 |  | 7,857
Commercial and industrial |  | 65,208 |  | 67,094 |  | 16,835 |  | 10,724 |  | 20,968 |  | 75,932 |  | 88,062 |  | 16,835
Construction |  | 1,788 |  | 1,788 |  | 56 |  | - |  | - |  | 1,788 |  | 1,788 |  | 56
Mortgage |  | 408,767 |  | 458,010 |  | 38,760 |  | 100,701 |  | 135,084 |  | 509,468 |  | 593,094 |  | 38,760
Leasing |  | 1,099 |  | 1,099 |  | 320 |  | - |  | - |  | 1,099 |  | 1,099 |  | 320
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  | 28,829 |  | 28,829 |  | 4,571 |  | - |  | - |  | 28,829 |  | 28,829 |  | 4,571
Personal |  | 72,989 |  | 72,989 |  | 19,098 |  | - |  | - |  | 72,989 |  | 72,989 |  | 19,098
Auto |  | 1,161 |  | 1,161 |  | 228 |  | - |  | - |  | 1,161 |  | 1,161 |  | 228
Other |  | 1,256 |  | 1,256 |  | 186 |  | - |  | - |  | 1,256 |  | 1,256 |  | 186
Total Puerto Rico | $ | 781,204 | $ | 852,117 | $ | 115,409 | $ | 233,904 | $ | 354,915 | $ | 1,015,108 | $ | 1,207,032 | $ | 115,409
December 31, 2018
Popular U.S.
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance | allowance
Construction | $ | - | $ | - | $ | - | $ | 12,060 | $ | 18,127 | $ | 12,060 | $ | 18,127 | $ | -
Mortgage |  | 7,237 |  | 8,899 |  | 2,451 |  | 2,183 |  | 3,127 |  | 9,420 |  | 12,026 |  | 2,451
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HELOCs |  | 6,236 |  | 6,285 |  | 1,558 |  | 1,498 |  | 1,572 |  | 7,734 |  | 7,857 |  | 1,558
Personal |  | 631 |  | 631 |  | 252 |  | 142 |  | 143 |  | 773 |  | 774 |  | 252
Total Popular U.S. | $ | 14,104 | $ | 15,815 | $ | 4,261 | $ | 15,883 | $ | 22,969 | $ | 29,987 | $ | 38,784 | $ | 4,261
December 31, 2018
Popular, Inc.
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance | allowance
Commercial multi-family | $ | 932 | $ | 932 | $ | 4 | $ | - | $ | - | $ | 932 | $ | 932 | $ | 4
Commercial real estate non-owner occupied |  | 85,583 |  | 86,282 |  | 27,494 |  | 96,005 |  | 138,378 |  | 181,588 |  | 224,660 |  | 27,494
Commercial real estate owner occupied |  | 113,592 |  | 132,677 |  | 7,857 |  | 26,474 |  | 60,485 |  | 140,066 |  | 193,162 |  | 7,857
Commercial and industrial |  | 65,208 |  | 67,094 |  | 16,835 |  | 10,724 |  | 20,968 |  | 75,932 |  | 88,062 |  | 16,835
Construction |  | 1,788 |  | 1,788 |  | 56 |  | 12,060 |  | 18,127 |  | 13,848 |  | 19,915 |  | 56
Mortgage |  | 416,004 |  | 466,909 |  | 41,211 |  | 102,884 |  | 138,211 |  | 518,888 |  | 605,120 |  | 41,211
Leasing |  | 1,099 |  | 1,099 |  | 320 |  | - |  | - |  | 1,099 |  | 1,099 |  | 320
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit Cards |  | 28,829 |  | 28,829 |  | 4,571 |  | - |  | - |  | 28,829 |  | 28,829 |  | 4,571
HELOCs |  | 6,236 |  | 6,285 |  | 1,558 |  | 1,498 |  | 1,572 |  | 7,734 |  | 7,857 |  | 1,558
Personal |  | 73,620 |  | 73,620 |  | 19,350 |  | 142 |  | 143 |  | 73,762 |  | 73,763 |  | 19,350
Auto |  | 1,161 |  | 1,161 |  | 228 |  | - |  | - |  | 1,161 |  | 1,161 |  | 228
Other |  | 1,256 |  | 1,256 |  | 186 |  | - |  | - |  | 1,256 |  | 1,256 |  | 186
Total Popular, Inc. | $ | 795,308 | $ | 867,932 | $ | 119,670 | $ | 249,787 | $ | 377,884 | $ | 1,045,095 | $ | 1,245,816 | $ | 119,670
December 31, 2017
Puerto Rico
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal |  | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance |  | allowance
Commercial multi-family | $ | 206 | $ | 206 | $ | 32 | $ | - | $ | - | $ | 206 | $ | 206 | $ | 32
Commercial real estate non-owner occupied |  | 101,485 |  | 102,262 |  | 23,744 |  | 11,454 |  | 27,522 |  | 112,939 |  | 129,784 |  | 23,744
Commercial real estate owner occupied |  | 127,634 |  | 153,495 |  | 10,221 |  | 24,634 |  | 57,219 |  | 152,268 |  | 210,714 |  | 10,221
Commercial and industrial |  | 43,493 |  | 46,918 |  | 2,985 |  | 14,549 |  | 23,977 |  | 58,042 |  | 70,895 |  | 2,985
Mortgage |  | 450,226 |  | 504,006 |  | 46,354 |  | 58,807 |  | 75,228 |  | 509,033 |  | 579,234 |  | 46,354
Leasing |  | 1,456 |  | 1,456 |  | 475 |  | - |  | - |  | 1,456 |  | 1,456 |  | 475
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  | 33,676 |  | 33,676 |  | 5,569 |  | - |  | - |  | 33,676 |  | 33,676 |  | 5,569
Personal |  | 62,488 |  | 62,488 |  | 15,690 |  | - |  | - |  | 62,488 |  | 62,488 |  | 15,690
Auto |  | 2,007 |  | 2,007 |  | 425 |  | - |  | - |  | 2,007 |  | 2,007 |  | 425
Other |  | 1,009 |  | 1,009 |  | 165 |  | - |  | - |  | 1,009 |  | 1,009 |  | 165
Total Puerto Rico | $ | 823,680 | $ | 907,523 | $ | 105,660 | $ | 109,444 | $ | 183,946 | $ | 933,124 | $ | 1,091,469 | $ | 105,660
December 31, 2017
Popular U.S.
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance | allowance
Mortgage | $ | 6,774 | $ | 8,439 | $ | 2,478 | $ | 2,468 | $ | 3,397 | $ | 9,242 | $ | 11,836 | $ | 2,478
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HELOCs |  | 3,530 |  | 3,542 |  | 722 |  | 761 |  | 780 |  | 4,291 |  | 4,322 |  | 722
Personal |  | 542 |  | 542 |  | 231 |  | 224 |  | 224 |  | 766 |  | 766 |  | 231
Total Popular U.S. | $ | 10,846 | $ | 12,523 | $ | 3,431 | $ | 3,453 | $ | 4,401 | $ | 14,299 | $ | 16,924 | $ | 3,431
December 31, 2017
Popular, Inc.
| Impaired Loans – With an | Impaired Loans |  |  |  |  |  |
| Allowance | With No Allowance | Impaired Loans - Total
|  |  | Unpaid |  |  |  |  | Unpaid |  |  | Unpaid |  |
| Recorded | principal | Related | Recorded | principal | Recorded | principal | Related
(In thousands) | investment | balance | allowance | investment | balance | investment | balance | allowance
Commercial multi-family | $ | 206 | $ | 206 | $ | 32 | $ | - | $ | - | $ | 206 | $ | 206 | $ | 32
Commercial real estate non-owner occupied |  | 101,485 |  | 102,262 |  | 23,744 |  | 11,454 |  | 27,522 |  | 112,939 |  | 129,784 |  | 23,744
Commercial real estate owner occupied |  | 127,634 |  | 153,495 |  | 10,221 |  | 24,634 |  | 57,219 |  | 152,268 |  | 210,714 |  | 10,221
Commercial and industrial |  | 43,493 |  | 46,918 |  | 2,985 |  | 14,549 |  | 23,977 |  | 58,042 |  | 70,895 |  | 2,985
Mortgage |  | 457,000 |  | 512,445 |  | 48,832 |  | 61,275 |  | 78,625 |  | 518,275 |  | 591,070 |  | 48,832
Leasing |  | 1,456 |  | 1,456 |  | 475 |  | - |  | - |  | 1,456 |  | 1,456 |  | 475
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit Cards |  | 33,676 |  | 33,676 |  | 5,569 |  | - |  | - |  | 33,676 |  | 33,676 |  | 5,569
HELOCs |  | 3,530 |  | 3,542 |  | 722 |  | 761 |  | 780 |  | 4,291 |  | 4,322 |  | 722
Personal |  | 63,030 |  | 63,030 |  | 15,921 |  | 224 |  | 224 |  | 63,254 |  | 63,254 |  | 15,921
Auto |  | 2,007 |  | 2,007 |  | 425 |  | - |  | - |  | 2,007 |  | 2,007 |  | 425
Other |  | 1,009 |  | 1,009 |  | 165 |  | - |  | - |  | 1,009 |  | 1,009 |  | 165
Total Popular, Inc. | $ | 834,526 | $ | 920,046 | $ | 109,091 | $ | 112,897 | $ | 188,347 | $ | 947,423 | $ | 1,108,393 | $ | 109,091
The following tables present the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2018 and 2017.
For the year ended December 31, 2018
| Puerto Rico |  | Popular U.S. |  | Popular, Inc.
| Average |  | Interest |  | Average |  | Interest |  | Average |  | Interest
| recorded |  | income |  | recorded |  | income |  | recorded |  | income
(In thousands) | investment |  | recognized |  | investment |  | recognized |  | investment |  | recognized
Commercial multi-family | $ | 693 |  | $ | 50 |  | $ | - |  | $ | - |  | $ | 693 |  | $ | 50
Commercial real estate non-owner occupied |  | 138,832 |  |  | 5,742 |  |  | - |  |  | - |  |  | 138,832 |  |  | 5,742
Commercial real estate owner occupied |  | 148,967 |  |  | 6,528 |  |  | - |  |  | - |  |  | 148,967 |  |  | 6,528
Commercial and industrial |  | 69,406 |  |  | 4,097 |  |  | - |  |  | - |  |  | 69,406 |  |  | 4,097
Construction |  | 2,094 |  |  | 25 |  |  | 9,565 |  |  | - |  |  | 11,659 |  |  | 25
Mortgage |  | 509,038 |  |  | 17,663 |  |  | 9,258 |  |  | 165 |  |  | 518,296 |  |  | 17,828
Leasing |  | 1,195 |  |  | - |  |  | - |  |  | - |  |  | 1,195 |  |  | -
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  | 31,953 |  |  | - |  |  | - |  |  | - |  |  | 31,953 |  |  | -
HELOCs |  | - |  |  | - |  |  | 5,904 |  |  | - |  |  | 5,904 |  |  | -
Personal |  | 68,237 |  |  | 415 |  |  | 770 |  |  | - |  |  | 69,007 |  |  | 415
Auto |  | 1,413 |  |  | - |  |  | - |  |  | - |  |  | 1,413 |  |  | -
Other |  | 1,248 |  |  | - |  |  | - |  |  | - |  |  | 1,248 |  |  | -
Total Popular, Inc. | $ | 973,076 |  | $ | 34,520 |  | $ | 25,497 |  | $ | 165 |  | $ | 998,573 |  | $ | 34,685
For the year ended December 31, 2017
| Puerto Rico |  | Popular U.S. |  | Popular, Inc.
| Average |  | Interest |  | Average |  | Interest |  | Average |  | Interest
| recorded |  | income |  | recorded |  | income |  | recorded |  | income
(In thousands) | investment |  | recognized |  | investment |  | recognized |  | investment |  | recognized
Commercial multi-family | $ | 130 |  | $ | 4 |  | $ | - |  | $ | - |  | $ | 130 |  | $ | 4
Commercial real estate non-owner occupied |  | 117,182 |  |  | 4,745 |  |  | - |  |  | - |  |  | 117,182 |  |  | 4,745
Commercial real estate owner occupied |  | 156,890 |  |  | 4,939 |  |  | - |  |  | - |  |  | 156,890 |  |  | 4,939
Commercial and industrial |  | 60,466 |  |  | 1,899 |  |  | - |  |  | - |  |  | 60,466 |  |  | 1,899
Mortgage |  | 504,709 |  |  | 12,661 |  |  | 9,006 |  |  | 200 |  |  | 513,715 |  |  | 12,861
Leasing |  | 1,642 |  |  | - |  |  | - |  |  | - |  |  | 1,642 |  |  | -
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  | 36,109 |  |  | - |  |  | - |  |  | - |  |  | 36,109 |  |  | -
HELOCs |  | - |  |  | - |  |  | 2,964 |  |  | - |  |  | 2,964 |  |  | -
Personal |  | 64,467 |  |  | - |  |  | 505 |  |  | - |  |  | 64,972 |  |  | -
Auto |  | 2,065 |  |  | - |  |  | - |  |  | - |  |  | 2,065 |  |  | -
Other |  | 915 |  |  | - |  |  | - |  |  | - |  |  | 915 |  |  | -
Total Popular, Inc. | $ | 944,575 |  | $ | 24,248 |  | $ | 12,475 |  | $ | 200 |  | $ | 957,050 |  | $ | 24,448
Modifications A modification of a loan constitutes a troubled debt restructuring when a borrower is experiencing financial difficulty and the modification constitutes a concession. For a summary of the accounting policy related to troubled debt restructurings (“TDRs’), refer to the Summary of Significant Accounting Policies included i n Note 2 to these Consolidated Financial Statements. TDRs amounted to $1.5 billion at December 31, 2018 (December 31, 2017 - $1.3 billion). The amount of outstanding commitments to lend additional funds to debtors owing receivables who se terms have been modified in TDRs amounted to $16 million related to the commercial loan portfolio at December 31, 2018 (December 31, 2017 - $8 million). At December 31, 2018, the mortgage loan TDRs include $543 million guaranteed by U.S. sponsored entities at BPPR, compared to $449 million at December 31, 2017. The following table present s the non-covered and covered loans classified as TDRs according to their accruing status and the relat ed allowance at December 31, 2018 and 2017.
| Popular, Inc.
| December 31, 2018 |  |  | December 31, 2017
(In thousands) |  | Accruing |  | Non-Accruing |  | Total |  | Related Allowance |  |  |  | Accruing |  | Non-Accruing |  | Total |  | Related Allowance
Non-covered loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 229,758 | $ | 130,921 | $ | 360,679 | $ | 46,889 |  |  | $ | 161,220 | $ | 59,626 | $ | 220,846 | $ | 32,472
Construction |  | - |  | 1,788 |  | 1,788 |  | 56 |  |  |  | - |  | - |  | - |  | -
Mortgage |  | 906,712 |  | 135,758 |  | 1,042,470 |  | 41,211 |  |  |  | 803,278 |  | 126,798 |  | 930,076 |  | 48,832
Leases |  | 668 |  | 440 |  | 1,108 |  | 320 |  |  |  | 863 |  | 393 |  | 1,256 |  | 475
Consumer |  | 94,193 |  | 15,651 |  | 109,844 |  | 24,523 |  |  |  | 93,916 |  | 12,233 |  | 106,149 |  | 22,802
Non-covered loans held-in-portfolio | $ | 1,231,331 | $ | 284,558 | $ | 1,515,889 | $ | 112,999 |  |  | $ | 1,059,277 | $ | 199,050 | $ | 1,258,327 | $ | 104,581
Covered loans held-in-portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage | $ | - | $ | - | $ | - | $ | - |  |  | $ | 2,658 | $ | 3,227 | $ | 5,885 | $ | -
Covered loans held-in-portfolio | $ | - | $ | - | $ | - | $ | - |  |  | $ | 2,658 | $ | 3,227 | $ | 5,885 | $ | -
T he following table s present the loan count by type of modification for those loans modified in a TDR during the years ended December 31, 2018 and 2017. Loans modified as TDRs for the U.S. operations are considered insignificant to the Corporation.
Popular, Inc.
For the year ended December 31, 2018
| Reduction in interest rate |  | Extension of maturity date |  | Combination of reduction in interest rate and extension of maturity date |  | Other
Commercial multi-family | - |  | 2 |  | - |  | -
Commercial real estate non-owner occupied | 3 |  | 17 |  | - |  | -
Commercial real estate owner occupied | 4 |  | 64 |  | - |  | -
Commercial and industrial | 6 |  | 87 |  | - |  | -
Construction | 1 |  | - |  | - |  | -
Mortgage | 85 |  | 49 |  | 359 |  | 57
Leasing | - |  | - |  | 4 |  | -
Consumer: |  |  |  |  |  |  |
Credit cards | 579 |  | - |  | 4 |  | 432
HELOCs | - |  | 27 |  | 11 |  | 1
Personal | 1,356 |  | 6 |  | - |  | 2
Auto | - |  | 7 |  | 3 |  | -
Other | 25 |  | - |  | 2 |  | -
Total | 2,059 |  | 259 |  | 383 |  | 492
Popular, Inc.
For the year ended December 31, 2017
| Reduction in interest rate |  | Extension of maturity date |  | Combination of reduction in interest rate and extension of maturity date |  | Other
Commercial real estate non-owner occupied | 4 |  | 2 |  | - |  | -
Commercial real estate owner occupied | 4 |  | 17 |  | - |  | -
Commercial and industrial | 3 |  | 40 |  | - |  | -
Mortgage | 55 |  | 39 |  | 348 |  | 125
Leasing | - |  | 1 |  | 9 |  | -
Consumer: |  |  |  |  |  |  |
Credit cards | 491 |  | - |  | 5 |  | 537
HELOCs | - |  | 14 |  | 8 |  | 1
Personal | 757 |  | 6 |  | 2 |  | 3
Auto | - |  | 5 |  | 4 |  | 1
Other | 32 |  | 1 |  | - |  | 1
Total | 1,346 |  | 125 |  | 376 |  | 668
The following tables present, by class, quantitative information related to loans modified as TDRs during the years ended December 31, 2018 and 2017.
Popular, Inc.
For the year ended December 31, 2018
(Dollars in thousands) | Loan count | Pre-modification outstanding recorded investment | Post-modification outstanding recorded investment | Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family | 2 | $ | 1,377 | $ | 1,375 | $ | 106
Commercial real estate non-owner occupied | 20 |  | 109,081 |  | 79,695 |  | 6,230
Commercial real estate owner occupied | 68 |  | 31,233 |  | 29,962 |  | 1,170
Commercial and industrial | 93 |  | 52,653 |  | 51,855 |  | 13,981
Construction | 1 |  | 4,210 |  | 4,293 |  | 474
Mortgage | 550 |  | 67,518 |  | 59,919 |  | 2,696
Leasing | 4 |  | 98 |  | 96 |  | 30
Consumer: |  |  |  |  |  |  |
Credit cards | 1,015 |  | 10,065 |  | 10,671 |  | 1,331
HELOCs | 39 |  | 3,961 |  | 3,891 |  | 935
Personal | 1,364 |  | 21,976 |  | 21,979 |  | 6,320
Auto | 10 |  | 173 |  | 152 |  | 26
Other | 27 |  | 601 |  | 599 |  | 99
Total | 3,193 | $ | 302,946 | $ | 264,487 | $ | 33,398
Popular, Inc.
For the year ended December 31, 2017
(Dollars in thousands) | Loan count | Pre-modification outstanding recorded investment | Post-modification outstanding recorded investment | Increase (decrease) in the allowance for loan losses as a result of modification
Commercial real estate non-owner occupied | 6 | $ | 2,172 | $ | 2,032 | $ | 146
Commercial real estate owner occupied | 21 |  | 5,356 |  | 5,346 |  | 313
Commercial and industrial | 43 |  | 2,655 |  | 4,786 |  | 507
Mortgage | 567 |  | 69,084 |  | 64,552 |  | 4,108
Leasing | 10 |  | 347 |  | 347 |  | 101
Consumer: |  |  |  |  |  |  |
Credit cards | 1,033 |  | 9,283 |  | 10,196 |  | 1,241
HELOCs | 23 |  | 2,504 |  | 2,421 |  | 299
Personal | 768 |  | 12,884 |  | 12,911 |  | 3,027
Auto | 10 |  | 2,043 |  | 1,999 |  | 362
Other | 34 |  | 2,014 |  | 2,014 |  | 72
Total | 2,515 | $ | 108,342 | $ | 106,604 | $ | 10,176
During the year ended December 31, 2018, six loans with an aggregate unpaid principal balance of $82.1 million were restructured into multiple notes (“Note A / B split”). The Corporation recorded $29.6 million chargeoffs as part of those loan restructuring s. The post-modification outstanding recorded investment in the tables above is presented net of these char ge-offs. The restructuring of those loans was made after analyzing the borrowers’ capacity to repay the debt, collateral and ability to perform under the modified terms. The recorded investment on those commercial TDRs amounted to approximately $52.5 million at December 31, 2018 with a related allowance for loan losses amounting to approximately $105 thousand. T he following tables present, by class, TDRs that were subject to payment default and that had been modified as a TDR during the twelve months preceding the default date. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or charged-off, whichever occurs first. The recorded investment as of period end is inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.
Popular, Inc.
Defaulted during the year ended December 31, 2018
(Dollars in thousands) | Loan count | Recorded investment as of first default date
Commercial real estate non-owner occupied | 2 | $ | 11,245
Commercial real estate owner occupied | 5 |  | 480
Commercial and industrial | 8 |  | 7,208
Mortgage | 161 |  | 12,362
Consumer: |  |  |
Credit cards | 236 |  | 2,098
HELOCs | 2 |  | 205
Personal | 107 |  | 2,300
Auto | 5 |  | 115
Other | 1 |  | 7
Total | 527 | $ | 36,020
Popular, Inc.
Defaulted during the year ended December 31, 2017
(Dollars in thousands) | Loan count | Recorded investment as of first default date
Commercial real estate non-owner occupied | 3 | $ | 543
Commercial real estate owner occupied | 4 |  | 1,912
Commercial and industrial | 5 |  | 636
Mortgage | 110 |  | 10,112
Leasing | 4 |  | 146
Consumer: |  |  |
Credit cards | 369 |  | 3,286
HELOCs | 1 |  | 97
Personal | 139 |  | 3,461
Auto | 5 |  | 103
Other | 1 |  | 9
Total | 641 | $ | 20,305
Commercial, consumer and mortgage loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Corporation evaluates the loan for possible further impa irment. The allowance for loan losses may be increased or partial charge-offs may be taken to further write-down the carrying value of the loan. Credit Quality The Corporation has defined a risk rating system to assign a rating to all credit exposures, pa rticularly for the commercial and construction loan portfolios. Risk ratings in the aggregate provide the Corporation’s management the asset quality profile for the loan portfolio. The risk rating system provides for the assignment of ratings at the obligo r level based on the financial condition of the borrower. The Corporation’s consumer and mortgage loans are not subject to the risk rating system. Consumer and mortgage loans are classified substandard or loss based on their delinquency status. All other c onsumer and mortgage loans that are not classified as substandard or loss would be considered “un rated”. The Corporation’s obligor risk rating scales range from rating 1 (Excellent) to rating 14 (Loss). The obligor risk rating reflects the risk of payment default of a borrower in the ordinary course of business. Pass Credit Classifications: Pass (Scales 1 through 8) – Loans classified as pass have a well defined primary source of re payment, with no apparent risk, strong financial position, minimal operating risk, profitability, liquidity and strong capitalization. Watch (Scale 9) – Loans classified as watch have acceptable business credit, but borrower’s operations, cash flow or fin ancial condition evidence more than average risk, requires above average levels of supervision and attention from Loan Officers. Special Mention (Scale 10) - Loans classified as special mention have potential weaknesses that deserve management’s close atte ntion. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date. Adversely Classified Classifications: Substandard (Scales 11 and 12) - Loans classified as substandard are deemed to be inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans classified as such have well-defined weaknesses that jeopardize the liquidat ion of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful (Scale 13) - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make the collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss (Scale 14) - Uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even thoug h partial recovery may be effected in the future. Risk ratings scales 10 through 14 conform to regulatory ratings. The assignment of the obligor risk rating is based on relevant information about the ability of borrowers to service their debts such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation periodically reviews its loans classification to evaluate if the y are properly classified, and to determine impairment, if any. The frequency of these reviews will depend on the amount of the aggregate outstanding debt, and the risk rating classification of the obligor. In addition, during the renewal and annual review process of applicable credit facilities, the Corporation evaluates the corresponding loan grades. The Corporation has a Commercial Loan Review department within the Corporate Risk Reviews Division that reports directly to the Corporation’s Risk Management Committee and administratively to the Chief Risk Officer, which performs annual comprehensive credit process reviews of all lending groups in BPPR. This group evaluates the credit risk profile of each originating unit along with each unit’s credit administration effectiveness, including the assessment of the risk rating representative of the current credit quality of the loans, and the evaluation of collateral documentation. The monitoring performed by this group contributes to assess compliance with credit policies and underwriting standards, determine the curren t level of credit risk, evaluate the effectiveness of the credit management process and identify control deficiencies that may arise in the credit-granting process. Based on its findings, Commercial Loan Review recommends corrective actions, if necessary, t hat help in maintaining a sound credit process. The Loan Review Group reports the results of the credit process reviews to the Risk Management Committee of the Corporation’s Board of Directors. The following tables present the outstanding balance, net of unearned income, of non-covered loans held-in-portfolio based on the Corporation’s assignment of obligor risk ratings as defined at December 31, 2018 and 2017.
December 31, 2018
|  |  |  | Special |  |  |  |  |  |  |  |  | Pass/ |  |
(In thousands) | Watch | Mention | Substandard | Doubtful | Loss | Sub-total | Unrated | Total
Puerto Rico |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 1,634 | $ | 4,548 | $ | 3,590 | $ | - | $ | - | $ | 9,772 | $ | 135,856 | $ | 145,628
Commercial real estate non-owner occupied |  | 470,506 |  | 233,173 |  | 342,962 |  | - |  | - |  | 1,046,641 |  | 1,275,960 |  | 2,322,601
Commercial real estate owner occupied |  | 262,476 |  | 174,510 |  | 291,468 |  | 2,078 |  | - |  | 730,532 |  | 991,721 |  | 1,722,253
Commercial and industrial |  | 655,092 |  | 130,641 |  | 156,515 |  | 177 |  | 73 |  | 942,498 |  | 2,239,663 |  | 3,182,161
| Total Commercial |  | 1,389,708 |  | 542,872 |  | 794,535 |  | 2,255 |  | 73 |  | 2,729,443 |  | 4,643,200 |  | 7,372,643
Construction |  | 147 |  | 634 |  | 1,788 |  | - |  | - |  | 2,569 |  | 83,386 |  | 85,955
Mortgage |  | 3,057 |  | 2,182 |  | 154,506 |  | - |  | - |  | 159,745 |  | 6,273,578 |  | 6,433,323
Leasing |  | - |  | - |  | 3,301 |  | - |  | 12 |  | 3,313 |  | 931,460 |  | 934,773
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | 16,035 |  | - |  | - |  | 16,035 |  | 1,031,238 |  | 1,047,273
| HELOCs |  | - |  | - |  | 165 |  | - |  | - |  | 165 |  | 5,186 |  | 5,351
| Personal |  | 849 |  | 19 |  | 18,827 |  | - |  | - |  | 19,695 |  | 1,230,930 |  | 1,250,625
| Auto |  | - |  | - |  | 24,093 |  | - |  | 84 |  | 24,177 |  | 2,584,608 |  | 2,608,785
| Other |  | - |  | - |  | 14,743 |  | - |  | 215 |  | 14,958 |  | 129,786 |  | 144,744
| Total Consumer |  | 849 |  | 19 |  | 73,863 |  | - |  | 299 |  | 75,030 |  | 4,981,748 |  | 5,056,778
Total Puerto Rico | $ | 1,393,761 | $ | 545,707 | $ | 1,027,993 | $ | 2,255 | $ | 384 | $ | 2,970,100 | $ | 16,913,372 | $ | 19,883,472
Popular U.S. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 85,901 | $ | 7,123 | $ | 6,979 | $ | - | $ | - | $ | 100,003 | $ | 1,301,537 | $ | 1,401,540
Commercial real estate non-owner occupied |  | 152,635 |  | 9,839 |  | 46,555 |  | - |  | - |  | 209,029 |  | 1,672,715 |  | 1,881,744
Commercial real estate owner occupied |  | 49,415 |  | 23,963 |  | 2,394 |  | - |  | - |  | 75,772 |  | 223,167 |  | 298,939
Commercial and industrial |  | 5,825 |  | 1,084 |  | 76,459 |  | - |  | - |  | 83,368 |  | 1,004,785 |  | 1,088,153
| Total Commercial |  | 293,776 |  | 42,009 |  | 132,387 |  | - |  | - |  | 468,172 |  | 4,202,204 |  | 4,670,376
Construction |  | 35,375 |  | 37,741 |  | 58,005 |  | - |  | - |  | 131,121 |  | 562,373 |  | 693,494
Mortgage |  | - |  | - |  | 11,032 |  | - |  | - |  | 11,032 |  | 790,903 |  | 801,935
Legacy |  | 534 |  | 224 |  | 2,409 |  | - |  | - |  | 3,167 |  | 22,782 |  | 25,949
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | - |  | - |  | - |  | - |  | 38 |  | 38
| HELOCs |  | - |  | - |  | 2,615 |  | - |  | 10,964 |  | 13,579 |  | 129,473 |  | 143,052
| Personal |  | - |  | - |  | 1,910 |  | - |  | 701 |  | 2,611 |  | 286,738 |  | 289,349
| Other |  | - |  | - |  | 4 |  | - |  | - |  | 4 |  | 220 |  | 224
| Total Consumer |  | - |  | - |  | 4,529 |  | - |  | 11,665 |  | 16,194 |  | 416,469 |  | 432,663
Total Popular U.S. | $ | 329,685 | $ | 79,974 | $ | 208,362 | $ | - | $ | 11,665 | $ | 629,686 | $ | 5,994,731 | $ | 6,624,417
Popular, Inc. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 87,535 | $ | 11,671 | $ | 10,569 | $ | - | $ | - | $ | 109,775 | $ | 1,437,393 | $ | 1,547,168
Commercial real estate non-owner occupied |  | 623,141 |  | 243,012 |  | 389,517 |  | - |  | - |  | 1,255,670 |  | 2,948,675 |  | 4,204,345
Commercial real estate owner occupied |  | 311,891 |  | 198,473 |  | 293,862 |  | 2,078 |  | - |  | 806,304 |  | 1,214,888 |  | 2,021,192
Commercial and industrial |  | 660,917 |  | 131,725 |  | 232,974 |  | 177 |  | 73 |  | 1,025,866 |  | 3,244,448 |  | 4,270,314
| Total Commercial |  | 1,683,484 |  | 584,881 |  | 926,922 |  | 2,255 |  | 73 |  | 3,197,615 |  | 8,845,404 |  | 12,043,019
Construction |  | 35,522 |  | 38,375 |  | 59,793 |  | - |  | - |  | 133,690 |  | 645,759 |  | 779,449
Mortgage |  | 3,057 |  | 2,182 |  | 165,538 |  | - |  | - |  | 170,777 |  | 7,064,481 |  | 7,235,258
Legacy |  | 534 |  | 224 |  | 2,409 |  | - |  | - |  | 3,167 |  | 22,782 |  | 25,949
Leasing |  | - |  | - |  | 3,301 |  | - |  | 12 |  | 3,313 |  | 931,460 |  | 934,773
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | 16,035 |  | - |  | - |  | 16,035 |  | 1,031,276 |  | 1,047,311
| HELOCs |  | - |  | - |  | 2,780 |  | - |  | 10,964 |  | 13,744 |  | 134,659 |  | 148,403
| Personal |  | 849 |  | 19 |  | 20,737 |  | - |  | 701 |  | 22,306 |  | 1,517,668 |  | 1,539,974
| Auto |  | - |  | - |  | 24,093 |  | - |  | 84 |  | 24,177 |  | 2,584,608 |  | 2,608,785
| Other |  | - |  | - |  | 14,747 |  | - |  | 215 |  | 14,962 |  | 130,006 |  | 144,968
| Total Consumer |  | 849 |  | 19 |  | 78,392 |  | - |  | 11,964 |  | 91,224 |  | 5,398,217 |  | 5,489,441
Total Popular, Inc. | $ | 1,723,446 | $ | 625,681 | $ | 1,236,355 | $ | 2,255 | $ | 12,049 | $ | 3,599,786 | $ | 22,908,103 | $ | 26,507,889
The following table presents the weighted average obligor risk rating at December 31, 2018 for those classifications that consider a range of rating scales.
Weighted average obligor risk rating | (Scales 11 and 12) |  |  |  | (Scales 1 through 8)
Puerto Rico: |  |  |  |  | Substandard |  |  |  |  |  |  | Pass |  |
Commercial multi-family |  |  |  |  |  | 11.20 |  |  |  |  |  |  |  | 6.02 |  |
Commercial real estate non-owner occupied |  |  |  |  |  | 11.11 |  |  |  |  |  |  |  | 6.93 |  |
Commercial real estate owner occupied |  |  |  |  |  | 11.29 |  |  |  |  |  |  |  | 7.25 |  |
Commercial and industrial |  |  |  |  |  | 11.33 |  |  |  |  |  |  |  | 7.15 |  |
| Total Commercial |  |  |  |  |  | 11.22 |  |  |  |  |  |  |  | 7.09 |  |
Construction |  |  |  |  |  | 12.00 |  |  |  |  |  |  |  | 7.64 |  |
Popular U.S. : |  |  |  |  | Substandard |  |  |  |  |  |  | Pass |  |
Commercial multi-family |  |  |  |  |  | 11.00 |  |  |  |  |  |  |  | 7.39 |  |
Commercial real estate non-owner occupied |  |  |  |  |  | 11.01 |  |  |  |  |  |  |  | 6.82 |  |
Commercial real estate owner occupied |  |  |  |  |  | 11.16 |  |  |  |  |  |  |  | 7.55 |  |
Commercial and industrial |  |  |  |  |  | 11.96 |  |  |  |  |  |  |  | 7.26 |  |
| Total Commercial |  |  |  |  |  | 11.56 |  |  |  |  |  |  |  | 7.14 |  |
Construction |  |  |  |  |  | 11.21 |  |  |  |  |  |  |  | 7.85 |  |
Legacy |  |  |  |  |  | 11.17 |  |  |  |  |  |  |  | 7.94 |  |
December 31, 2017
|  |  |  | Special |  |  |  |  |  |  |  |  | Pass/ |  |
(In thousands) | Watch | Mention | Substandard | Doubtful | Loss | Sub-total | Unrated | Total
Puerto Rico[1] |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 1,387 | $ | 1,708 | $ | 6,831 | $ | - | $ | - | $ | 9,926 | $ | 136,473 | $ | 146,399
Commercial real estate non-owner occupied |  | 327,811 |  | 335,011 |  | 307,579 |  | - |  | - |  | 970,401 |  | 1,434,158 |  | 2,404,559
Commercial real estate owner occupied |  | 243,966 |  | 215,652 |  | 354,990 |  | 2,124 |  | - |  | 816,732 |  | 1,006,882 |  | 1,823,614
Commercial and industrial |  | 453,546 |  | 108,554 |  | 241,695 |  | 471 |  | 126 |  | 804,392 |  | 2,086,935 |  | 2,891,327
| Total Commercial |  | 1,026,710 |  | 660,925 |  | 911,095 |  | 2,595 |  | 126 |  | 2,601,451 |  | 4,664,448 |  | 7,265,899
Construction |  | 110 |  | 4,122 |  | 1,545 |  | - |  | - |  | 5,777 |  | 89,592 |  | 95,369
Mortgage |  | 2,748 |  | 3,564 |  | 155,074 |  | - |  | - |  | 161,386 |  | 6,415,393 |  | 6,576,779
Leasing |  | - |  | - |  | 1,926 |  | - |  | 1,048 |  | 2,974 |  | 807,016 |  | 809,990
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | 18,227 |  | - |  | - |  | 18,227 |  | 1,074,994 |  | 1,093,221
| HELOCs |  | - |  | - |  | 257 |  | - |  | - |  | 257 |  | 5,830 |  | 6,087
| Personal |  | 429 |  | 659 |  | 20,790 |  | - |  | - |  | 21,878 |  | 1,200,434 |  | 1,222,312
| Auto |  | - |  | - |  | 5,446 |  | - |  | 20 |  | 5,466 |  | 845,347 |  | 850,813
| Other |  | - |  | - |  | 16,324 |  | - |  | 440 |  | 16,764 |  | 140,824 |  | 157,588
| Total Consumer |  | 429 |  | 659 |  | 61,044 |  | - |  | 460 |  | 62,592 |  | 3,267,429 |  | 3,330,021
Total Puerto Rico | $ | 1,029,997 | $ | 669,270 | $ | 1,130,684 | $ | 2,595 | $ | 1,634 | $ | 2,834,180 | $ | 15,243,878 | $ | 18,078,058
Popular U.S. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 11,808 | $ | 6,345 | $ | 7,936 | $ | - | $ | - | $ | 26,089 | $ | 1,184,604 | $ | 1,210,693
Commercial real estate non-owner occupied |  | 46,523 |  | 16,561 |  | 37,178 |  | - |  | - |  | 100,262 |  | 1,588,049 |  | 1,688,311
Commercial real estate owner occupied |  | 28,183 |  | 30,893 |  | 8,590 |  | - |  | - |  | 67,666 |  | 251,309 |  | 318,975
Commercial and industrial |  | 4,019 |  | 603 |  | 123,935 |  | - |  | - |  | 128,557 |  | 876,426 |  | 1,004,983
| Total Commercial |  | 90,533 |  | 54,402 |  | 177,639 |  | - |  | - |  | 322,574 |  | 3,900,388 |  | 4,222,962
Construction |  | 36,858 |  | 8,294 |  | 54,276 |  | - |  | - |  | 99,428 |  | 685,232 |  | 784,660
Mortgage |  | - |  | - |  | 14,852 |  | - |  | - |  | 14,852 |  | 678,776 |  | 693,628
Legacy |  | 688 |  | 426 |  | 3,302 |  | - |  | - |  | 4,416 |  | 28,564 |  | 32,980
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | 11 |  | - |  | - |  | 11 |  | 89 |  | 100
| HELOCs |  | - |  | - |  | 6,084 |  | - |  | 8,914 |  | 14,998 |  | 167,087 |  | 182,085
| Personal |  | - |  | - |  | 2,069 |  | - |  | 704 |  | 2,773 |  | 295,229 |  | 298,002
| Other |  | - |  | - |  | - |  | - |  | - |  | - |  | 319 |  | 319
| Total Consumer |  | - |  | - |  | 8,164 |  | - |  | 9,618 |  | 17,782 |  | 462,724 |  | 480,506
Total Popular U.S. | $ | 128,079 | $ | 63,122 | $ | 258,233 | $ | - | $ | 9,618 | $ | 459,052 | $ | 5,755,684 | $ | 6,214,736
Popular, Inc. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial multi-family | $ | 13,195 | $ | 8,053 | $ | 14,767 | $ | - | $ | - | $ | 36,015 | $ | 1,321,077 | $ | 1,357,092
Commercial real estate non-owner occupied |  | 374,334 |  | 351,572 |  | 344,757 |  | - |  | - |  | 1,070,663 |  | 3,022,207 |  | 4,092,870
Commercial real estate owner occupied |  | 272,149 |  | 246,545 |  | 363,580 |  | 2,124 |  | - |  | 884,398 |  | 1,258,191 |  | 2,142,589
Commercial and industrial |  | 457,565 |  | 109,157 |  | 365,630 |  | 471 |  | 126 |  | 932,949 |  | 2,963,361 |  | 3,896,310
| Total Commercial |  | 1,117,243 |  | 715,327 |  | 1,088,734 |  | 2,595 |  | 126 |  | 2,924,025 |  | 8,564,836 |  | 11,488,861
Construction |  | 36,968 |  | 12,416 |  | 55,821 |  | - |  | - |  | 105,205 |  | 774,824 |  | 880,029
Mortgage |  | 2,748 |  | 3,564 |  | 169,926 |  | - |  | - |  | 176,238 |  | 7,094,169 |  | 7,270,407
Legacy |  | 688 |  | 426 |  | 3,302 |  | - |  | - |  | 4,416 |  | 28,564 |  | 32,980
Leasing |  | - |  | - |  | 1,926 |  | - |  | 1,048 |  | 2,974 |  | 807,016 |  | 809,990
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Credit cards |  | - |  | - |  | 18,238 |  | - |  | - |  | 18,238 |  | 1,075,083 |  | 1,093,321
| HELOCs |  | - |  | - |  | 6,341 |  | - |  | 8,914 |  | 15,255 |  | 172,917 |  | 188,172
| Personal |  | 429 |  | 659 |  | 22,859 |  | - |  | 704 |  | 24,651 |  | 1,495,663 |  | 1,520,314
| Auto |  | - |  | - |  | 5,446 |  | - |  | 20 |  | 5,466 |  | 845,347 |  | 850,813
| Other |  | - |  | - |  | 16,324 |  | - |  | 440 |  | 16,764 |  | 141,143 |  | 157,907
| Total Consumer |  | 429 |  | 659 |  | 69,208 |  | - |  | 10,078 |  | 80,374 |  | 3,730,153 |  | 3,810,527
Total Popular, Inc. | $ | 1,158,076 | $ | 732,392 | $ | 1,388,917 | $ | 2,595 | $ | 11,252 | $ | 3,293,232 | $ | 20,999,562 | $ | 24,292,794
The following table presents the weighted average obligor risk rating at December 31, 2017 for those classifications that consider a range of rating scales.
Weighted average obligor risk rating | (Scales 11 and 12) |  |  |  | (Scales 1 through 8)
Puerto Rico:[1] |  |  |  |  | Substandard |  |  |  |  |  |  | Pass |  |
Commercial multi-family |  |  |  |  |  | 11.16 |  |  |  |  |  |  |  | 5.89 |  |
Commercial real estate non-owner occupied |  |  |  |  |  | 11.06 |  |  |  |  |  |  |  | 6.99 |  |
Commercial real estate owner occupied |  |  |  |  |  | 11.28 |  |  |  |  |  |  |  | 7.14 |  |
Commercial and industrial |  |  |  |  |  | 11.16 |  |  |  |  |  |  |  | 7.11 |  |
| Total Commercial |  |  |  |  |  | 11.17 |  |  |  |  |  |  |  | 7.06 |  |
Construction |  |  |  |  |  | 11.00 |  |  |  |  |  |  |  | 7.76 |  |
Popular U.S.: |  |  |  |  | Substandard |  |  |  |  |  |  | Pass |  |
Commercial multi-family |  |  |  |  |  | 11.00 |  |  |  |  |  |  |  | 7.28 |  |
Commercial real estate non-owner occupied |  |  |  |  |  | 11.04 |  |  |  |  |  |  |  | 6.74 |  |
Commercial real estate owner occupied |  |  |  |  |  | 11.10 |  |  |  |  |  |  |  | 7.14 |  |
Commercial and industrial |  |  |  |  |  | 11.82 |  |  |  |  |  |  |  | 6.17 |  |
| Total Commercial |  |  |  |  |  | 11.59 |  |  |  |  |  |  |  | 6.80 |  |
Construction |  |  |  |  |  | 11.00 |  |  |  |  |  |  |  | 7.70 |  |
Legacy |  |  |  |  |  | 11.11 |  |  |  |  |  |  |  | 7.93 |  |
[1] | Excludes covered loans acquired in the Westernbank FDIC-assisted transaction.

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